Scotcash: Our role in 'Improving and Expanding Social Finance'
Nine million people in the UK are in serious financial debt although many of them fail to recognise the depth of their plight or seek help to deal with it. Another 8 million are at risk of finding themselves in the same position, living only one pay-cheque or benefit payment from financial disaster.
In their report the Centre for Social Justice (CSJ) state:
Wide ranging reform is needed to rescue the millions who are trapped in problem debt. Most importantly, the poorest in society need access to affordable credit and banking services that will not drive them into debt... to remedy this, the CSJ sets out a bold vision for social finance in the UK, provided by a range of social enterprises...
The researchers estimate that in 2012 more than two million people took out a high-cost loan as they were unable to access any other forms of credit. A factor compounding this problem is that more than 1.8 million social tenants are currently unable to access basic financial services online because they are unable to complete identity checks.
The research also points out that around seven million people struggle to access basic financial services such as banking, savings, borrowing and insurance, and must often pay disproportionately more when using them. Amongst this group around three million people either do not have access to a bank account or choose not to use one.
Therefore it is asserted by the researchers that policies need to be implemented to tackle the rising problem of personal debt through using Credit Unions, Community Banks and CDFIs like Scotcash1 that are providing the aforementioned services to those who are financially excluded in the community.
It is proposed that policies should be implemented that are necessary to develop a competitive market for social finance providers that will serve low income people better and help them avoid problem debt. Such as:
- Identify communities and people who would benefit from the expansion of social finance;
- Help people access social finance by allowing them to prove their identity and credit worthiness in new ways; and
- Improve and expand social finance by increasing the sustainability, competitiveness and number of SFPs.
To read more on this report please click on links below which provide the Full Report and the Executive Summary:
1Scotcash Case study can be found on Page 83 of the Full Report